Confidence Beats But Remains Adrift Of Equity Bliss

While it is certain that derivative-hopers and uptick-algo-watchers are relieved to see a better than expected rise in University of Michigan's Confidence index (thanks to a generous rise in current economic expectations - which we suspect is as co-dependent on the miracle of rising stock prices as it is used to reflexively justify higher equity prices). Stocks are bid (briefly) on this but remain, medium-term, notably dislocated from the real state of less-than-exuberance among the people. And in great rhetorical questions, this one remains: are stocks now higher because rising consumer confidence, or is consumer confidence rising because stocks just spiked.

That way, we can all just set our expected course for a real unemployment rate of 25%, 75 million Americans on SNAP/EBT, a real GDP growth rate of -4% annually, an official U.S. national debt of 23 trillion USD (with 2.5 trillion USD deficits), food & energy inflation at an honest 10% per annum, and Dow 20,000, all set against the continuing backdrop of a worsening, spiraling depression, by the time The Bernanke's current term is over in 2014, and it will all be far less newsworthy.

I honestly don't know now, we get the GDP figures worse than expected, today's manufacturing output MUCH worse than expected and yet we keep getting to new highs on the basis of 'sentiment' figures (Russell 2000).

2) which keeps Wall Street happy and Congress too as it can continue their gridlock games and can kicking,

3) Wall Street then buys stocks with part of the flow, creating low risk gains as long as the flow continues,

4)rising stock prices makes those lucky enough to have 401Ks happy as stocks rise, so they buy more stuff, adding to GDP,

5)and those who don’t have 401Ks are happy because they see stock prices going up and assume everything is getting better and better all the time! So they buy more stuff and add to GDP too.

It’s a "virtuous" (but fraudulent) circle that will continue until the economy slips back into “official” recession and corporate earnings begin to fall, or somebody loses faith in Ts or the dollar, or Ben stops printing, imo.

Does any of it really matter anymore? The die is cast, and the game makers are fully in control. Those of us who pine for truth and integrity in markets and price discovery are naive idealists, and this is an expensive position to hold. I refuse to play the game any longer. See you on the sidelines.

Obama called in the number this moring and made sure it was higher! My hope is that this market crashes down under his watch, he deserves to go up in flames for creating an economy that is an illusion based on lies, fudged numbers and Fed funny money! That will be your fucking legacy!

Markets get ahead of themselves...that should be taken as a good thing...for a time. At some point the economy's "refusal" to grow will "take the pound of flesh." what we do know for a fact is that the euro zone is officially deflating...and they are not responding correctly to this fact. The technical term for deflation is that it "comes in waves." in other words like a hurricane "the PM's get slammed"...but that's just the outer bands. "the eye is still a long way off."

Hopium zealots are in a constant euphoric lather because the equity markets are approaching new highs. As was pointed out last week, when the Dow was last this high in October 2007, the price of gold was around $700. Here's a deeper-dive tale of the "recovery" tape:

Silver: Oct. 2007=$13, Today=$30

Gold: Oct 2007=$760, Today=$1,620 (or whatever they hammer it to...)

Reported Unemployment: Oct 2007=4.7%, Today=7.9%

Case-Shiller Home Index: Oct 2007=190.9, Today=144.9

New Home Sales: 2007=774K, 2012=367K

Housing Units Built: 2007=1,500K, 2012=651K

Fed Reserve Balance Sheet: Oct 2007=$873B, Today=$3.11T

Food Stamp Recipients: Dec 2007=28.7M, Today=48.2M

Federal Spending, Annual Rate: 2007=$2.7T, Today=$3.6T

Fed Tax Revenues, Annual: 2007=$2.5T, Today=$2.4T

Retail Gasoline Price: 2007=$2.84/gal, 2012=$3.68/gal

Money Supply: Oct 2007=$851.6B, Today=$2760.7B

Personal Bankruptcies: 2007=801K (75% up from 2006), 2012=1,245K

Foreclosures: 2007=405k (40% up from 2006), 2012=742K

Don't be fooled by the 'recovery' meme, and be cautious about entering the pre-slaughter sheep pen that is the equity markets.